New Delhi, December 6 – The Reserve Bank of India’s decision to cut the repo rate by 25 basis points is expected to boost housing demand, with home loan rates potentially falling to levels seen during the coronavirus pandemic.
Media reports claim that borrowers could benefit from a 25 basis point reduction in home loan interest rates. Currently, several public sector banks are offering home loans at 7.35 percent, which is expected to come down to 7.1 percent following RBI’s decision. These include Union Bank, Bank of India, and Bank of Maharashtra.
According to analysts, for a home loan of Rs 1 crore over 15 years, the monthly EMI will reduce by up to Rs 1,440 after the 0.25 percent rate cut.
Bankers say that with new loan rates at 7.1 percent, lenders will have to make significant cuts in deposit rates or revise benchmark interest rates. This means new borrowers will pay more compared to existing floating-rate customers.
Until deposit rates decline, banks’ net interest margins are likely to compress, while non-banking financial companies are expected to benefit immediately from lower funding costs.
Analysts say that RBI’s neutral stance and its open market operations purchase system will maintain adequate liquidity in the system and help pass on the benefits of interest rate cuts to customers.
RBI has introduced a plan for Rs 1 lakh crore open market operations purchase and $5 billion 3-year USD/INR buy-sell swap, which is expected to inject liquidity of approximately Rs 1.45 lakh crore.
While announcing monetary policy decisions, RBI Governor Sanjay Malhotra said that the MPC voted unanimously for interest rate cuts to promote growth in the economy.
My name is Ganpat Singh Choughan. I am an experienced content writer with 7 years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
